ASIC loses fee overcharging case against Commonwealth Bank of Australia

The Australian Securities and Investments Commission has lost its case against Commonwealth Bank of Australia (CBA), which alleged the bank engaged in misleading or deceptive conduct, made false or misleading representations and contravened its obligations as an Australian financial services licensee by incorrectly charging monthly access fees to customers.

The complaint alleged that, from June 2010 to September 2019, CBA incorrectly charged monthly access fees to customers – between $4 and $6 – who were entitled to fee waivers because they met certain criteria under their contracts with the bank. CBA’s terms and conditions also stated that a waiver would apply where a customer met specific criteria, for example, if a minimum amount was deposited into the account each month or if the customer was a student.

Almost $55 million in fees were charged to nearly one million customers and more than 800,000 accounts. CBA received approximately 14,000 complaints from customers about the fee overcharging.

The bank identified problems with its systems which caused the overcharging in 2011 but only notified ASIC in December 2018 and lodged its first of a number of breach reports with ASIC in May 2019.

CBA has undertaken remediation for the majority of customers impacted by the incorrect fee charging. As at 13 September 2021, CBA had paid approximately $64 million in remediation to almost one million customers who were overcharged. There are some customers who have not been remediated, and CBA has not paid components of compensation or interest for some customers, according to ASIC.

Court says CBA did not breach its general obligation

The Federal Court, however, reached a different conclusion and found that:

• in relation to fees incorrectly charged and recorded on a customer’s bank statement, the only representation by CBA was that a fee of a particular amount had been charged on or around the nominated date, and that the customer should check whether the entry was correct and notify CBA in the event of any error; and
• CBA did not represent that it would have adequate systems and processes in place to ensure that it could and would provide the applicable fee waiver when it entered into a contract with a customer to establish an account. Rather, CBA’s terms and conditions acknowledged that sometimes the bank “can get things wrong, and when this happens” the bank is “determined to make them right again”.
• CBA had not breached its general obligation to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly.

ASIC Deputy Chair Sarah Court said: “ASIC pursued this case because we believed CBA did not have robust compliance systems to ensure customers were being correctly charged. ASIC will carefully consider the judgment and continue to work to ensure large financial institutions charge fees correctly and put their customers first.”